THE South African Revenue Service (SARS) is to work with religious institutions to investigate tax non-compliance, it said on Friday. In its statement, the revenue service acknowledged that a number of religious organisations are complying with their tax obligations.
“SARS will engage religious institutions with the intention to investigate possible tax non-compliance in this sector. The decision follows SARS’ own preliminary investigation, its meeting with the CRL Rights Commission and general reports suggesting that certain religious organisations and leaders are not in compliance with tax laws, and may be enriching themselves at the expense of tax compliance and their altruistic and philanthropic purpose,” said the revenue service.
Religious institutions may apply to SARS to be exempted from the payment of Income Tax and certain other taxes in terms of section 10(1) (cN) of the Income Tax Act, 1962, read together with the provisions of section 30 of the Income Tax Act, 1962.
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Once such tax exemption status is granted, there are a number of specific criteria that have to be complied with, including but not limited to:
- Conducting activities in a non-profit manner with an altruistic or philanthropic intent
- No such activity is intended to directly or indirectly promote economic self-interest of any person other than by way of reasonable remuneration paid for services rendered;
- Religious institutions are prohibited from directly or indirectly distributing funds to any person other than in performing their religious activity.
SARS further encouraged these entities to use its Voluntary Disclosure Programme to regulate their taxes.
For more information, religious institutions can visit the SARS website www.sars.gov.za or call the SARS Contact Centre on 0800 00 7277.
